Republican House Speaker Kurt Zellers said delaying payments to school districts and raising revenue through new gambling are both options when it comes to balancing the state's budget.

Zellers, in an interview on MPR's Morning Edition, said borrowing against the state's future tobacco settlement payments is also an option. But he said Dayton rejected a plan that would have combined the school payments shift and tobacco bonds, and he isn't confident Dayton would sign a gambling bill.

Because work remains on an overall deal, Zellers said Dayton should call the Legislature into a special session to pass a bill that would keep government working for 30 days while budget negotiations continue.

"What we've been doing hasn't worked for us," Zellers said of the out-of-session negotiations. "Why not try something different?"

Zellers pointed out that Dayton has gone to the courts to amend the list of essential services that should continue in a shutdown.

"Rather than going back and forth through the courts, why not have a 'lights on' [bill]," Zellers said, adding that GOP leaders would be just as committed to reaching a budget deal. A "lights on" measure would keep government operating even though lawmakers haven't passed the next two-year budget.

Zellers said GOP leaders will continue to reject Dayton's proposal to raise income tax rates for the state's top earners.

"Raising those taxes with tough economic times and when our neighboring states and states all across the country aren't makes Minnesota uncompetitive," he said. "We just can't afford to be an outlier and be the second-highest taxed state in the country during tough economic times."

Zellers said he's supported gambling revenue such as slot machines at horse racetracks, but he doesn't think Dayton would sign onto so-called "racino." A casino at Block E in downtown Minneapolis was also discussed, but none of the Minneapolis lawmakers support it, he said.

Besides tobacco bonds and a K-12 funding shift, Zellers said there might be ways to save money on health care by requesting that the federal government approve dramatic changes to the state's Medicaid program. There's no guarantee the changes would be approved.

"I think that will be a lot of the focus today, is where our health care folks have been, what they have been able to accomplish you know in the last day or two here, and seeing if maybe that number that we were apart really wasn't as far apart as we though it was," he said.

A surcharge on doctors and hospitals was also discussed, but Zellers said it didn't save as much as leaders thought it would.

Zellers also said he predicts a group including former Vice President Walter Mondale, a Democrat, and former Gov. Arne Carlson, a Republican, will suggest raising taxes as a solution.

"I would love to be surprised that that's not the case," Zellers said.

Even expanding the sales tax to clothing wouldn't be a good solution, he said.

"During back-to-school time, I don't think any of our, especially clothing retailers, would like to see a tax on clothes," he said.